Spice dealers see potential for more falls in cardamom prices

GUATEMALAN cardamom prices have held relatively stable of late after crashing lower between July and October last year, but traders believe there is further downward potential ahead due to indications of a decent sized crop and concerns that demand might remain slack over the coming months.

Andrew Barker, managing director of PBA Brokerage recalled that prices of mixed yellow quality (MYQ) and seeds had fallen particularly severely over the last three to four months. “Seeds are now trading well under half of what they were trading six months ago, while MYQ is trading at least 200% less than they were six months ago,” he told .

Mr Barker noted that although whole green qualities had declined substantially in price they were now relatively stable in value at around $11 a kg with large whole greens at $12 a kg.

MYQs could be obtained for as little as $4 per kg and seeds were in the region of $11.50 to $12 per kg, he said.

Downward pricing pressure has come from the combination of favourable estimates for the Guatemalan crop, harvesting of which normally continues at least until March and often later, and positive reports for India’s crop.

Mr Barker remarked that concerns over the world financial crisis and a general lack of demand had also helped to drag the market lower. Nevertheless, he added: “I cannot see much more movement south at this point in time.”

Some trade forecasts have pegged the Guatemalan crop as high as 28,000 tonnes compared with an estimated 18,000 to 20,000 tonnes in 2010/11. Other sources have suggested 26,000 tonnes as a more realistic figure for the current crop.

One unknown is the extent of damage from fungus which is thought to have harmed up to 20% of the plants. However, even if the extent of damage is this high, it is felt that the crop could still end up ahead of that of last season.

One Dutch trader said the quantity of green cardamoms was much lower this season. “This means there are more volumes of the medium grades or lower grades so there are more MYQ and blemished cardamoms available. But of course that is not suitable for everybody so that has caused pressure on the cheaper varieties while the prices of green cardamom remain stable,” he said.

In addition, the Dutch trader observed that farmers and local collectors in Guatemala were now proving reluctant to release material because the prices were no longer appealing to them. “They are now holding on to the stocks they have and only want to release when the prices which they have in mind are being paid up,” he said.

The Dutch trader said that he was expecting demand to pick up this month after the usual seasonal slowdown in December. If local farmers and collectors then maintained their tactic of releasing new crop material very slowly then it was likely prices would increase in the short term.

“During the last two or three years we have seen extreme volatility in the cardamom prices,” he noted. “This season it seems that the fluctuations are not so high, so even if the market moves up it will probably be by maybe 10 or 20% but most probably not the 200 or 300% that we have seen in the last couple of years.”

The Dutch trader also noted that offtake from the Middle East – the biggest destination for Guatemalan cardamom – had slackened over the last month. Hence, much would also depend on the extent of buying by this key market over the coming months.